Forex - EUR/JPY drops on soft Chinese export data, growth forecast

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Forexpros - The euro fell against the yen on Friday on news that Chinese export data came in weaker than expected, while the European Central Bank cut its growth forecast for the continent next year, which sparked demand for the safe-haven yen.

In U.S. trading on Friday, EUR/JPY hit 96.18, down 0.52%, up from a low of 95.72 and off a high of 96.70.

The pair sought to test support at 95.72, the earlier low, and resistance at 96.46, the high from Aug. 1.

China reported earlier that its trade surplus narrowed unexpectedly in July, dropping to USD25.1 billion from a USD31.7 billion surplus.

Economists were expecting a USD35.1 billion surplus.

Soft demand for Chinese exports spooked markets worldwide on fears the global economy may be cooling faster than thought.

Meanwhile in Europe, the European Central Bank on Thursday cut its forecast for economic growth to 0.6% in 2013, down from 1% previously.

The ECB also forecast a 0.3% contraction in growth this year, slightly worse than its previous forecast for a 0.2% contraction.

The news cemented views that central banks around the world will take steps to stimulate their respective economies with monetary policy tools, which tend to weaken safe-haven currencies like the yen and send higher-yielding currencies and stocks rising.

The euro, meanwhile, was down against the pound and flat against the Canadian dollar, with EUR/GBP trading down 0.30% at 0.7846 and EUR/CAD down 0.01% and trading at 1.2197.



Forexpros
Forexpros

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